Ineos and Sasol pick a site for HDPE plant, and it's not in Louisiana

In a minor surprise, Ineos Group and Sasol Ltd. have chosen to locate their joint venture high density polyethylene plant in LaPorte, Texas.

The plant will have almost 1 billion pounds of annual bimodal HDPE capacity, made using Ineos’ own Innovene S-brand process technology. It’s expected to begin production in early 2016.

When the two firms announced the 50-50 HDPE JV in mid-2013, they said it would be located in southwest Louisiana. Johannesburg, South Africa-based Sasol is building an ethylene cracker in Lake Charles, La.

Instead, the new HDPE unit will be in LaPorte — about 130 miles west of Lake Charles on the Gulf Coast — where Rolle, Switzerland-based Ineos already operates several petrochemical units. The ethylene required for the production of the HDPE will be supplied by Ineos and Sasol in proportion to their respective ownership positions.

The investment “will allow Ineos to meet our customer’s needs for additional bimodal products,” Ineos executive Dennis Seith said in a June 9 news release. “It also supports Ineos’ strategy to invest and to capture synergies on our major sites.”

Seith serves as CEO of Ineos Olefins & Polymers USA. For Sasol, the LaPorte location “offers several benefits, including access to U.S. Gulf Coast infrastructure and proximity to [Sasol’s] proposed ethane cracker and derivatives complex in Southwest Louisiana,” global chemicals group executive Fleetwood Grobler said in the release.

Ineos already operates almost 1.3 billion pounds of PE capacity in LaPorte. The cracker and plant will be the first North American petrochemicals investment for Sasol.

The Sasol/Ineos JV is one of at least eight producers with plans to add PE capacity in North America in the near future. Those projects could add at least 11 billion pounds of capacity to a market that currently has just under 45 billion pounds of annual capacity — meaning North American PE capacity could grow 25 percent or more.

These expansions are being made possible by new supplies of shale-based natural gas that are being developed throughout North America. A combination of hydraulic fracturing and horizontal drilling is allowing energy firms to access natural gas more easily.